Smitten with a start-up

In the spring of 2010, Matt George was working nights and weekends as a paramedic to help pay his way through Middlebury College when he had an idea for a business.

“I was doing anything I could to pay bills,” George said.

The inspiration for George’s business, now known as BreakShuttle, came from his college, where the school arranged transportation for students to go home on breaks and holidays, running buses to New York and Boston. George, 23, knew that on a typical academic break, Middlebury College was transporting about 400 students.

George’s idea was to get students at other colleges and universities home for their breaks and holidays. The nearest big school was the University of Vermont. He spent $80 printing posters advertising his service for spring break and hung them up around the campus.

“We made $10,000 profit on our first trip at UVM,” George said, using the royal “we.” He is the sole founder of BreakShuttle.

George’s strategy with BreakShuttle was simple and straightforward. He beat the market rate of a bus ticket to New York or Boston, where the majority of students wanted to go, by working with charter bus companies.

“We essentially wholesale buses, getting them at a much lower rate than the general public,” George said. “It was convenient for the students and also super cost effective for the families that end up paying for this.”

George transported about 150 UVM students home for spring break in 2010, then spent the majority of his junior year at Middlebury as a White House intern. In his senior year, 2012-2013, he returned to building his business. He started working the phone, contacting schools around the country, even bringing both of his parents out of retirement to help him.

“They played the parent angle really well,” George said. “We find that a large portion of our purchasers are actually parents, so having that angle was really helpful.”

A cold call

Bates College Administrator Keith Tannenbaum in Lewiston, Maine, was one of the contacts George made in 2012.

“It was pretty much a cold call,” Tannenbaum said.

George wanted to offer bus service to Hartford, Conn., and New York City. Tannenbaum was already running a bus to Boston.

“I was at that point a little uncertain about where the company stood,” Tannenbaum said. “I decided to hold off on an official agreement and allow them to run the program without any involvement from the college.”

A year later, Tannenbaum was ready to turn the transportation reins over to George, as long as he would add Boston to his list of destinations offered.

“I had already been offering bus service to Boston and was hoping to get out of that business,” Tannenbaum said. “It’s not financially viable for the college, also it’s a lot of work.”

BreakShuttle ran its first official buses for Bates on Thanksgiving break. Buses were leaving the campus last Friday for Hartford, New York and Boston for the Christmas break.

While the college has signed a contract with BreakShuttle to provide service to its students, there’s no financial obligation for Bates. The college does help BreakShuttle promote the service, which seems to be going well, Tannenbaum said.

“I’m more likely to get negative feedback than praise, and I haven’t heard any negative feedback,” he said.

BreakShuttle has also signed contracts with Bucknell University in Lewisburg, Pa., Dickinson College in Carlisle, Pa., Goucher College in Baltimore, the University of North Texas in Denton, Texas Tech University in Lubbock, St. Olaf University in Northfield, Minn., and St. Bonaventure University in St. Bonaventure, N.Y.

BreakShuttle has pending contracts with about 15 more colleges and universities across the country, George said.

“We’re actually huge in Texas, where we work with a number of large schools like Texas A&M, Texas Tech, and the University of North Texas,” he said.

Making tracks

Building on his success with BreakShuttle, George has launched a new company called GroupZoom to do for all group travel what he is doing now for student travel.

“Let’s say you and 30 of your friends wanted to go from Burlington to see a show in New York,” he said. “You would go on the website once it’s launched this spring, and the site would automatically invite all your friends. They would pay through the website, and the trip is confirmed. Once all your friends pay, a bus magically shows up where you tell it to and whisks you off to New York City.”

With GroupZoom, George has attracted investments from the major players in Vermont’s venture capital scene, including FreshTracks Capital in Shelburne, the state’s only private venture capital fund, according to Managing Partner and Co-Founder Cairn Cross.

“Matt built this business right out of his dorm room while he was a student at Middlebury College and built it to a pretty good sized business,” said Lee Bouyea, a partner in FreshTracks. “We thought it was an exciting time for the company to continue to grow from there.”

FreshTracks launched its first fund in 2000, raising $11 million. Its second fund was $14 million. The firm launched its third fund, of similar size, with an investment in GroupZoom in the “mid-six figures,” Cross said.

Cross believes George’s training as a biologist served him well as a budding entrepreneur.

“I think there’s a high degree or correlation between students trained in sciences and starting a business,” Cross said. “How do you form a hypothesis about something? How do you test the hypothesis? It strikes me that students with a well-rounded education can be good business people because of that.”

George first approached FreshTracks when he realized he was getting in over his head with BreakShuttle.

“We were presented with a ton of schools that wanted our service, and I don’t have rich parents who can help, so I reached out via cold email to information@freshtracks.com,” George said. “I had no idea what to say or do. I think that speaks well of FreshTracks. They took someone with no experience.”

In fact, Cairn Cross said, George didn’t even know what a “pitch deck” was when they asked him to supply one. A pitch deck is the standard first approach contained in a set of slides investors ask for when considering an investment — a succinct summation from the entrepreneur of why it makes sense to pony up.

The partners wanted to spend more time with George for a simple reason.

“He had actually proved the concept without anybody else’s money while going to school full-time,” Cross said. “That makes a big difference to us, as opposed to just another idea.”

Last summer, FreshTracks coached George on how to approach investors to help him survive until fall when things would get busy again. The firm also offered him space in its offices in Shelburne to reduce his “burn rate” of capital on overhead.

Low capital density

The seed capital for GroupZoom came from a variety of sources, including angel investors and the Vermont Center for Emerging Technologies’ Seed Capital Fund. Andrew Stickney, vice president of VCET, said the fund invested $50,000 in the startup.

“When we put money in it’s for the long term,” Stickney said. “It’s a belief in the team, a belief in the opportunity.”

VCET is a nonprofit public benefit corporation founded in 2005 in affiliation with the University of Vermont with a mandate to increase the number of technology startups in the state. The organization also has partnerships with Norwich University, Champlain College, Middlebury College and the five Vermont state colleges.

“VCET exists because Vermont doesn’t have venture capital,” Stickney said. “We have an incredibly entrepreneurial state. We don’t have the density of people or the density of capital other places do, which creates an opportunity and need for VCET to step in and help those things get off the ground.”

Beginning with its first investment in May 2010, VCET’s Vermont Seed Capital Fund LP has invested a total of $2.2 million to date. The investment per company ranged from $60,000 to $250,000, with an average of $157,045 invested per company.

Angel investors also help fill the capital void in Vermont. These are accredited investors with a net worth of more than $1 million, not including the value of their personal residences, said Ken Merritt Jr. of Merritt & Merritt & Moulton, a Burlington law firm.

Merritt is president of North Country Angels, a group of about 30 angel investors in Vermont.

“We meet monthly to hear two presentations and then discuss amongst ourselves the companies that presented,” Merritt said. “If there’s any interest, one or more members of the group will engage in the due diligence process. Every member makes their own individual decision to invest. There is no group investment.”

Justin Siegel is one of the North Country Angels who decided to invest in GroupZoom, along with several others, Merritt said.

Siegel, 42, has started a couple of companies, including JNJ Mobile, based in Boston, which has a mobile social network focused on the gaming community, called MocaSpace. He has personal experience trying to raise money for a startup.

“I’ve been in Matt’s shoes, and it was tough,” he said. “I think Matt is a very impressive and ambitious guy, and I think the business he has built has a tremendous amount of potential. The best ideas come from solving a problem you yourself have had.”

Merritt did not invest in GroupZoom because his law firm represented FreshTracks in its investment in the company. He’s on the younger side of most entrepreneurs that get financed,” Merritt said of George.

Youth notwithstanding, Merritt said George’s “interesting business concept,” together with paying customers, were the keys to convincing FreshTracks and others to invest.

George is planning a soft launch for GroupZoom by mid-January in Burlington and Boston to start, offering the service exclusively to nonprofits. For every bus a nonprofit fills, for fundraising trips or any other purpose, GroupZoom will donate $1,000 back to the nonprofit.

George jokes with potential investors who don’t quite get his business plan that if they can show him anywhere online where they can book a group of 10 or more to go anywhere, he will come to their house for a month and cook them breakfast.

“Our core mission is moving groups,” George said. “We want to be the go-to spot for group travel just like Travelocity or Expedia or Kayak is for individual travel.”